Math (Interest Accruing)

Question 1

An interest accruing mortgage loan requires that $300,000 be paid at the end of a five-year term. If the rate of interest on the loan is j2 = 8%, calculate the amount of funds advanced.

(1) $246,578.13
(2) $202,669.25
(3) $226,965.28
(4) $364,995.87

Answer 1

2

j2 = 8% (convert to j1)
n=5

? 0 300,000

=-$202,669.25

Question 2

A real estate developer has borrowed $60,000 by way of an interest accruing loan written at j12 = 8%. How much will the developer owe at the end of 12 months?

(1) $64,979.97
(2) $68,603.40
(3) $71,286.62
(4) $60,800.00

Answer 2

1

j12 = 8%
n=12

60,000 0 ?

=-64,979.97

Question 3

An interest accruing mortgage loan requires that $500,000 be paid at the end of a 5-year term. If the rate of interest on the loan is j12 = 12%, calculate the amount of funds advanced.

(1) $283,713.43
(2) $279,197.41
(3) $312,500.00
(4) $275,224.81

Answer 3

4

j12=12%
n=60

? 0 500,000

-275,224.808

Question 4

Mac O’Rooney plans to build a small restaurant and requires $275,000 in construction financing. First Mortgage Co. has agreed to lend the funds in the form of an interest accruing loan. Interest is to be charged at a rate of 11.25% per annum, compounded semi-annually. How much will Mac owe at the end of the 12 month term?

(1) $306,807.62
(2) $340,355.45
(3) $305,937.50
(4) unable to determine from the information given.

Answer 4

1

j2 = 11.25
n=12

275,000 0 ?

=-306,807.61

Question 5

On an interest accruing mortgage, which one of the following interest rates would result in the highest outstanding balance?

(1) j12 = 14%
(2) j6 = 14%
(3) j4 = 14%
(4) j2 = 14%

Answer 5

1

Question 6

Fancy Finance Corporation has agreed to advance $370,000 to a real estate developer by way of an interest accruing loan. If Fancy Finance Corporation wants to earn an effective annual rate of 6% on the funds advanced, what is the amount they should receive from the developer in 30 days?

(1) $370,250.42
(2) $372,933.33
(3) $371,776.26
(4) Cannot be determined from the information given.

Answer 6

3

j1 = 6% (convert to j365)
n= 30

370,000 0 ?
=371,776.26

Question 7

Dave has recently been hired at a new job, and is starting to make investments with his excess income. Dave’s first investment is to place $5,000 in a term deposit where it will accrue interest at a rate of 6.5% per annum, compounded annually. The term of the investment is 18 months. How much money will Dave receive from the investment at the end of the 18-month term?

(1) $5,487.50
(2) $5,473.55
(3) $5,495.34
(4) $5,503.52

Answer 7

3

j1 = 6.5
n=18

5000 0 ?

=-5495.34